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Decision CRTC 89-93

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Archived

Decision

Ottawa, 6 April 1989

Decision CRTC 89-93

CFTO-TV Limited

Toronto, Ontario -881031900

Following a Public Hearing in Toronto on 3 October 1988, the Commission renews the broadcasting licence for CFTO-TV Toronto from 1 September 1989 to 31 August 1994, subject to the conditions specified in the appendix to this decision and in the licence to be issued.

CFTO-TV Limited, through Baton Broadcasting Incorporated (Baton) and other holding companies, is ultimately controlled by members of the Eaton family of Toronto whose broadcast holdings also include controlling interests in CJOH-TV Ottawa, and several other television stations and rebroadcasters in Saskatchewan.

In terms of audience size, CFTO-TV is the largest station in its market, a position it has held for the past 17 years. It is also the largest of the 18 CTV network affiliates and has played a leading role in that organization over the years. Under the terms of the CTV Television Network Ltd. shareholders agreement, the licensee's financial contribution to the CTV network is even greater than its audience size would suggest. The licensee estimates that its share of the network's Canadian program obligation during the network's current licence term will amount to more than $74 million. The Commission notes the licensee's continuing commitment to ensure "... that CTV has the resources necessary to produce excellence in Canadian programming in the interest of the Canadian broadcasting system."

With respect to its local programming, over the current licence term CFTO-TV has increased the amount of original local programs broadcast on the station from approximately 19.5 hours to more than 27 hours per week. This includes an increase in the amount of weekly local news over the past few years from 8 hours 25 minutes to 15 hours 15 minutes. This amount includes the new weekday "News at Noon" program, added this season (1988/89) at a first-year cost estimated by the licensee to be a minimum of $800,000. Other additions to CFTO-TV's local program schedule have included two co-operatively produced public affairs programs ("Sunday Edition" and "Sounding Board") and two co-operatively produced children's programs ("Polly Wog" and "Marie Soleil"). During the current season, CFTO-TV has become involved in another five programs produced co-operatively with other Baton-owned stations, such as CJOH-TV Ottawa and CKCK-TV Regina.

Glen-Warren Productions Limited (Glen-Warren) is CFTO-TV Limited's sister company and Baton's production arm. Over the years, Glen-Warren's facilities have been used to produce an important part of the CTV network's Canadian program schedule, including such programs as "Canada AM", "Lifetime", "Check It Out", "People to People" and "Definition".

Because of the extensive activity of this unregulated and unlicensed company in the production and distribution of Canadian programs, and in order to assess the licensee's own efforts to develop and produce Canadian programs, the Commission at the hearing discussed at some length with the licensee the nature of its relationship with Glen-Warren. According to the licensee:

CFTO is ... the broadcaster. Its production activities will relate to producing the local content and the local programming.... Glen-Warren, on the other hand, branches out a little further. Glen-Warren will interface with the co-producers. It will be involved in twinning of production [and] other aspects of production which will eventually translate into product... to be licensed by the individual television broadcasting stations of which CFTO would be one.

The Commission acknowledges the licensee's confirmation at the hearing that it would be prepared to co-operate with the Commission and make Glen-Warren's financial statements available to it on a confidential basis:

We would be more than happy to give to this Commission ... the Glen-Warren audited financial results so that it can be clean and clear.

The Commission may, at a later date, wish to examine these financial statements should it determine that a fuller review of the relationship between CFTO-TV Limited and Glen-Warren is in the public interest.

Based on the licensee's accomplishments as reviewed at the Toronto hearing, including its substantial activities, directly and through Glen-Warren, in the production of high quality Canadian programming, its participation in co-operative productions with other CTV affiliates and the increased amount of news and other local programming on CFTO-TV, the Commission is satisfied with the licensee's performance during its current term of licence.

At the hearing, the licensee expressed optimism that the future is likely to be buoyant "from an economic point of view." Regarding the Toronto market in particular, the licensee noted:

This is where the population is... where the disposable income [is], so this is where the vast majority of advertising dollars are...

Against this background, CFTO-TV Limited outlined the strategy it proposes to follow during the next five years to maintain its pre-eminent position in the Toronto market and its status as one of the leading television stations in Canada. The Commission notes in this regard the licensee's plans to invest a total of $26 million over the new licence term to upgrade its studio and transmission facilities.

With respect to programming, the licensee made the following statement:

We believe that the best strategy for attracting larger audiences is by strengthening the Canadian programming on our television stations, and that any further growth in audience and revenues will depend on the success of our Canadian programming.

According to one of two sets of projections included with its application, CFTO-TV Limited will expend $17,202,000 on Canadian programming in the first year of the new licence term. In explaining why a second set of projections containing a larger figure for Canadian program expenses was submitted, CFTO-TV stated:

Certain expenses, associated with CFTO's facilities and manpower have historically been recovered by the use of Glen-Warren productions and are reported as production revenue. The financial projections in this application have been prepared on the basis of the continuation of a recovery by Glen-Warren Production Limited.

The Commission notes that the $17,202,000 expenditure proposal mentioned above is a net amount after production revenues have been deducted.

As stated in the Public Notice introducing this and other television renewal decisions, the Commission has decided to impose conditions of licence requiring licensees of each television station that earned more than $10 million per year in total advertising revenues in 1987/88 to adhere to their forecasts for first-year expenditures on Canadian programming, at a minimum, and to adjust such expenditures in subsequent years in accordance with a formula linked to changes in station advertising revenues. The Commission is satisfied that this approach offers a reasonable and fair means of ensuring the Canadian program expenditures of each station will keep pace with changes in its revenue. The condition of licence pertaining to CFTO-TV in this regard is set out in the appendix to this decision.

With respect to local production, the Commission notes the licensee's commitment to broadcast 27 hours 20 minutes per week of original local programming on CFTO-TV, including an increase in the number of episodes of such programs as "Sounding Board" and "People in Action." The Commission expects the licensee to adhere to this commitment, at a minimum.

In order to improve the quality of its Canadian programming, the licensee indicated plans to increase its involvement in co-productions with independent producers and in co-operative productions with other CTV affiliates. Programs currently under development or in production by CFTO-TV and various independent producers, and intended for local or network broasdcast, include such children's programs as "EMU-TV", "The Admiral and the Princess" and "Railway Dragon".

The licensee also indicated that it intends to continue to produce "Polly Wog", "Sunday Edition", "Challenge" and "Canada in View" in co-operation with CJOH-TV Ottawa and other CTV affiliates.

With respect to drama, the licensee made a specific commitment to spend a minimum of $1 million during each year of its new licence term for the production of new Canadian drama. The Commission expects the licensee to adhere to this commitment. The licensee also made a commitment to provide an average of 15 minutes per week of original ongoing drama series production. The licensee had proposed that this commitment initially be met through a program entitled "Denim Blues", a CJOH-TV Ottawa production. It was acknowledged at the hearing, however, that this program may involve the equity participation of an independent producer and thus may not qualify as a local program under the Commission's guidelines set out in Public Notices CRTC 1985-58 and 1986-177 dated 20 March 1985 and 23 July 1986 respectively. Nevertheless, the Commission notes the licensee's confirmation at the hearing that this would not alter its commitment regarding the provision of an average of 27 hours 20 minutes per week of original local programming, including an average of 15 minutes per week of an original ongoing drama series. The Commission expects the licensee to adhere to this commitment.

The Commission also expects the licensee to adhere to its commitment to provide an average of 15 minutes per week, or 12 hours per year, of special dramatic presentations. The licensee indicated that such presentations would include an animated film of "The Nutcracker", a drama entitled "Courage of the Early Morning" with Billy Bishop as the subject, and additional episodes of "History of Canada".

In the area of music and variety, the licensee proposes to produce some specials during the new licence term, including programs featuring pianist Frank Mills and singer Véronique Béliveau. The Commission notes, however, that most of CFTO-TV's proposed variety programs will be produced with a view to possible network distribution. In fact, the licensee's program plans do not call for the broadcast of any local programming from this category on a regular basis during the upcoming licence term. Nor did CFTO-TV Limited present any concrete plans for programming featuring emerging local Canadian talent.

In response to a request by the Commission in Decision CRTC 87-878 dated 6 November 1987 for information about the Canadian programming plans of its television licensees across Canada, CFTO-TV Limited expressed the view that, because of the highly competitive nature of its coverage area, its viewers expect to see artists of national and international calibre and that, consequently, musical and variety programs are of a type best undertaken by the CTV network. The Commission acknowledges that the greater audience base of the CTV network, in comparison with that of CFTO-TV and other individual affiliates, enables the network to set correspondingly larger budgets for musical and variety programs, and to meet the costs for artists of national and international calibre that are featured within such programming. Nevertheless, the Commission does not consider that this diminishes the responsibility that CFTO-TV Limited has, as a local licensee, to provide its viewers with high quality local productions featuring the talents of emerging artists resident in the Toronto region. This is particularly the case given the wealth of talent that exists in the Toronto area, as well as the technical facilities and production capabilities so readily available to the licensee.

Accordingly, the Commission expects the licensee, within its local program schedule, to provide Canadian talent in the Toronto region with on-screen opportunities, if not in the form of a regularly-scheduled musical/variety program, then at least with a significantly greater frequency than has been provided in the past. This could be accomplished through the production of more local specials, or through the presentation of musical/variety segments featuring local talent within the body of other programs. The Commission also expects the licensee to schedule such programs at times when they can be expected to attract large audiences.

In renewing this licence, the Commission also authorizes CFTO-TV Limited to make use of the Vertical Blanking Interval. The Commission expects CFTO-TV Limited to adhere to the guidelines set out in Appendix A to Public Notice CRTC 1989-23 dated 23 March 1989 entitled "Services Using the Vertical Blanking Interval (Television) or Subsidiary Communications Multiplex Operation (FM)".

The licensee emphasized that 20 hours per week, or more than 70% of all local programs, will be closed captioned, supplementing the captioned programming contained in the CTV network schedule. The Commission encourages the licensee to continue to produce and acquire as many captioned programs as possible. The Commission expects the licensee to acquire a telephone device for the deaf (TDD) within the first year of the new licence term and to install it in the master control room or wherever is most appropriate in order to ensure access to the station throughout the broadcast day by deaf or hearing-impaired viewers.

Overall, taking into account the licensee's commitments to make substantial contributions to the production of high quality Canadian programs over the next five years, particularly local programs, the Commission is satisfied that the licence for CFTO-TV should be renewed for a full term.

The Commission wishes to acknowledge the eight interventions submitted in respect of this renewal application, including the support expressed by the Canadian Association of Broadcasters, the Catholic Register, Senderlea Communications Inc. and the Association of Canadian Advertisers. The Commission also acknowledges the interventions submitted by the Canadian Association of the Deaf, the Ontario Closed Caption Consumers, Inc., the Canadian Independent Record Production Association and the Alliance of Canadian Cinema, Television and Radio Artists and notes that matters raised in these interventions are addressed in the notice accompanying this decision.

Fernand Bélisle
Secretary General

APPENDIX

Conditions of licence for CFTO-TV Toronto

1. The licensee shall operate this broadcasting undertaking as part of the network operated by CTV Television Network Ltd.

2. The licensee shall expend on Canadian programming, at a minimum:

(a) for the year ending 31 August 1990, the amount of $17,202,000;

(b) for the year ending 31 August 1991, the amount set out in paragraph (a) above, increased (or decreased) by the year-over-year percentage change for the year ending 31 August 1990, in the total of the station's revenues from local time sales, national time sales and payments (if any) received from networks, as reported in the relevant Annual Return;

(c) for the year ending 31 August 1992, the minimum required expenditure calculated in accordance with paragraph (b) above, increased (or decreased) by the average of the year-over-year percentage changes for the years ending 31 August 1990 and 31 August 1991, in the total of the station's revenues from local time sales, national time sales and payments (if any) received from networks, as reported in the relevant Annual Returns; and

(d) in each subsequent year, an amount calculated in accordance with the following formula: the amount of the previous year's minimum required expenditure, increased (or decreased) by the average of the year-over-year percentage changes for the years ending on 31 August of the three previous years, in the total of the station's revenues from local time sales, national time sales and payments (if any) received from networks, as reported in the relevant Annual Returns;

with all terms or calculations found in paragraphs (b), (c) and (d) set out above to be interpreted or made in accordance with the explanations set out in Public Notice CRTC 1989-27 dated 6 April 1989.

3. The licensee shall adhere to the Canadian Association of Broadcasters' self-regulatory guidelines on sex-role stereotyping, as amended from time to time and approved by the Commission.

4. The licensee shall adhere to the provisions of the Broadcast Code for Advertising to Children published by the Canadian Association of Broadcasters as amended from time to time and approved by the Commission.